Multi-asset funds are dominating adviser preferences with 90 per cent using the strategies for accumulation and decumulation.
Research by Aegon found 63 per cent of advisers recommended multi-asset funds for their diversification, followed by risk-rated fund selection (45 per cent) and asset allocation expertise (35 per cent).
While 60 per cent of advisers would recommend multi-asset funds to clients with less than £100,000 to invest and 37 per cent would recommend portfolios from DFMs to clients with more than £500,000 saved.
Lorna Blyth, managing director for investment proposition, said: “There’s no doubt that elevated market volatility has made the past three years an incredibly challenging and unpredictable period for investment advice.
“But, as we start to see a gradual return to normality, it’s encouraging to know that the majority of advisers are aligned and feeling confident in the strategies employed by their clients’ investments."
Findings also showed 25 per cent of clients were invested in multi-asset funds compared with 20 per cent invested in DFM portfolios, 20 per cent in fully in-house model portfolios, 18 per cent in externally built model portfolios, 12 per cent in single strategy funds, and one per cent in individual stocks.
Blyth added: “In particular, our research shows advisers favour multi-asset funds as their primary investment structure, with 25 per cent of all client assets under management in such funds.
"This is likely due to their considerable versatility and diversity, and the ability to select options that align to different risk appetites.”
Although the research showed multi-asset funds are the most popular, the investment structure chosen by an adviser also depends on client circumstances and needs, according to Aegon.
Some 53 per cent of advisers considered multi-asset funds to be the least expensive approach.
Multi-asset funds were also the most recommended structure for clients with less than £100,000, with 60 per cent of advisers favouring this option.
In contrast, 80 per cent of advisers considered DFMs as the most expensive investment approach, while also being the most recommended structure for clients with more than £500,000 in savings, with 37% of advisers endorsing this option.
Advisers are also increasingly turning to external solutions when managing their clients’ assets with 63 per cent of advised assets making use of such solutions, including multi-asset funds, DFMs or model portfolios built using external expertise.
alina.khan@ft.com
